The U.S. hotel industry remains healthy, reaping the benefits of stronger economic growth and increased demand. Good fortune should continue, as forecasters predict record occupancy for U.S. hotels to last throughout the decade. However, a series of challenges continues to stall growth in average daily rate (ADR), such as increased supply, the impact of discounted loyalty rates and pressures from private accommodation.

Emerging markets are advancing rapidly, private accommodation and in-destination activities are coming of age, and new technologies are reshaping online travel search, shop and book from the inside-out. There has never been a more exciting time in the world of online travel. From AI to APAC (and a whole lot in between), this report – presented by Expedia Affiliate Network – highlights what to expect from digital travel in the year ahead.

While there may be just two mega-OTAs left standing (Expedia and Priceline) in the wake of consolidation, hotels, metasearch and private accommodation players are pushing to grow their share of the lodging landscape. This report presents analysis of traffic trends for the U.S. online accommodation marketplace, including hotel and private accommodation websites, as well as the hotel paths of online travel agencies (OTAs) and metasearch sites. Data includes monthly unique visitors, conversion and referrals for both desktop and mobile websites.

Macroeconomic trends continued to weigh on online travel agencies’ (OTAs) worldwide growth in 2Q15. A strengthened dollar put downward pressure on other currencies – including the euro – and made travel expensive in many markets. In addition, Greece’s financial bailout affected commerce and travel across the eurozone, and the unraveling of China’s stock market toward the end of the second quarter began unsettling markets worldwide. Despite these headwinds, the cumulative gross bookings of 11 public OTAs climbed 13% in 1H15.

While services like Expedia, Kayak and many others provide travelers access to nearly all components of their trips in one location, more often than not, bus travel options are missing from these online portals. While intercity bus has long been a popular mode of transportation in many countries across the world, in other nations it is still fighting the stigma of being a less-than-glamorous means of travel. Based in part on a series of interviews with bus aggregators, distributors and operators, this paper reviews the current state of the intercity bus market and the shift toward global online distribution.

U.S. public online travel agencies (OTAs) began their 2015 campaign on a strong note. While aggregate gross bookings for the three publicly listed U.S. OTAs – Expedia, Orbitz and Priceline – rose 14%, their combined growth softened considerably year over year. This was due, in part, to suppliers' efforts to increase their direct business amid improving fundamentals and recovering demand in the U.S. market. In addition, strengthening of the U.S. dollar masked OTAs' actual international growth.

Consolidation continued in the world’s largest online travel market, the U.S., as Expedia formalized its US$1.6 billion acquisition of Orbitz in September 2015. With Travelocity and Orbitz now in tow, Expedia has cornered the domestic online travel sector, firming its stance against its lone direct competitor, Priceline. Overseas, a stronger dollar remains a deterrent to OTA growth. In 3Q15, total U.S. public OTA gross bookings increased 2% year over year.

The OTA arms race continued to heat up in 2015 as Expedia moved ahead with acquisitions of Travelocity, Orbitz and HomeAway (planned to close 1Q16). Stronger efforts to sell direct by suppliers dampened overall growth rates for OTAs, but Expedia and Priceline still experienced healthy gains. Overall, the outlook for U.S. OTAs is positive, as they maintain a strong position in the search-shop-buy funnel amid a growing U.S. leisure travel market. Yet they face increasing pressure from suppliers, metasearch and the sharing economy in the ongoing battle for bookings.

Today, the technology used and services provided by the three major global distribution systems (GDSs) represent the foundational capability for most travel agencies and travel management companies (TMCs) and are realized by the end user through online travel agencies (OTAs) (Expedia, Orbitz, etc.) This GDS capability seems relatively stable and straight forward, but that has not always been the case, nor will it be going forward. The path to the current state has been fraught with numerous startup efforts and road kill on the travel distribution super highway. The saga continues.This paper is an effort to identify the business initiatives and technology advances that have the potential to disrupt and possibly redefine our current travel distribution system.